Local Online TV Ad Spending in the Billions in 2008

PaidContent reports on a study by Borrell Associates that online advertising for local TV stations will be up by 45% this year. But it also says that there’s a ton of unsold commercial spot inventory available, and that’s going to mean some issues for the television industry, such as:

Ending convergence: In a study on local online advertising in November, Borrell argued that bundling traditional and non-traditional media under one ad sales team had a dampening effect on the growth on internet revenues. Looking only at local TV, Borrell finds that most are adding online-only sales reps in an effort to sell a growing stable of unsold web inventory. The report finds these sales teams have their work cut out for them: “Nearly three-fourths of all TV site inventory is unsold. Looking ahead, TV sites should continue to gain share this year in most markets, topping $1.1 billion in online ad revenue overall.” Additionally, it helps to keep in mind that digital ventures remain a small piece of the broadcast TV puzzle; it’s barely 3 percent of most stations’ total revenues, leaving many station managers to doubt the wisdom of adding online resources.

Revenues vary: Borrell also benchmarks stations against TV households. The range for internet revenue per TV household was 36 cents for large markets, up to $1.28 for small markets. While it may be an easy-to-grasp benchmark for television operators, Borrell said it is generally irrelevant because the reach of the internet extends well beyond a stations’ broadcast signal. That said, not all sites are created equal. In large markets, several stations were making more than $3 million in online-only revenues, while others were pulling in less than $500,000. In a market where one station was making more than $4 million, a competitor in the same market was making $1.4 million, while three others were making less than $500,000 each. In the smallest markets, a handful of stations were generating more than $1 million, while their peers were laboring in the $100,000 to $200,000 range.